Germany: The Reluctant Superpower

Two recent articles caught our attention. First, the New York Times discussed growing worries in Germany about a post-American Europe,1 given the potential withdrawal of the U.S. from the superpower role. Second, an op-ed in Der Spiegel went so far as to suggest that Germany should become the world leader of an anti-Trump coalition.2

These reports are indicative of the rapidly changing views on how the U.S. manages its superpower role. The fact that Germans are considering their options in response to American foreign policy is a significant development.

In this report, we will start with the background of American foreign policy post-WWII to the present. This will set the stage for why Germany feels compelled to adjust its foreign policy. From there, we will reflect on how Europe and the rest of the world could react to a hegemonic Germany. As always, we will conclude with potential market ramifications.

U.S. Post-War Foreign Policy3

As WWII came to an end, the Roosevelt administration concluded that if it didn’t stay involved in the world, eventually the U.S. would be drawn into another world war. Thus, the decision was made to accept the superpower role.

The decision was quite controversial. The U.S. is fortunate to be surrounded by two unthreatening states and bodies of water. Because it faces no immediate threats, the U.S. can choose isolationism. Many other nations can’t make that choice. Because it doesn’t face nearby geopolitical dangers, the U.S. is, at least geographically, almost a perfect superpower. The U.S. doesn’t have to expend significant resources defending its borders. This characteristic can allow it to avoid the superpower role as well.

America’s primary superpower worry after the war was dealing with communism. George Kennan shaped the U.S. response to

Soviet communism with the “long telegram”4 in 1946. In this missive, he suggested that capitalism and democracy were superior systems and that communism could be defeated by containment and time. This became the way the U.S. dealt with its most critical geopolitical imperative after the war.

However, communism wasn’t the only important geopolitical issue. There were three regions of the world that needed to be managed. Europe had been the focal point of two world wars. The continent had not been able to cope with the emergence of Germany. The country, set on the northern European plain, had no natural defenses. Thus, it always faced the threat of invasion from either Russia or France. This same lack of natural barriers was destined to make Germany an international powerhouse. It was easy to move goods around the newly formed nation and to export them. In fact, Germany even had ocean access through the Baltic Sea.

As the German economy rapidly grew from its founding in 1870 into the early part of the 20th century, the country was becoming a threat to the established order. A series of unfortunate mistakes, including treaty obligations, inappropriate belligerence and the poor estimation of the costs of war, led Europe to stumble into WWI. The Treaty of Versailles virtually guaranteed that Germany would be humiliated but not crippled, and this led to the rise of the Third Reich and WWII.

After the war in Europe ended in 1945, the peace treaty left Germany divided.

Although the allies didn’t necessarily intend to keep the country in this state, the inability to work with Stalin on integrating the Soviet eastern sector into the rest of Germany led to the Cold War and the creation of East and West Germany.

It had become apparent that the best way to prevent another world war from originating in Europe was to manage the “German problem.” To accomplish that goal, the U.S. effectively demilitarized Germany (and, to a greater extent, Europe) by creating the North American Treaty Organization (NATO). Essentially, the U.S. took over security for Europe, paid for by American taxpayers.